Written by: Liu Jiaochain
Coinbase Research Institute released a bearish initial report. In this report, the Coinbase research team conducted an in-depth analysis of whether the cryptocurrency market has entered a bear market. The original report link is in the internal reference. Here are some views on this report.
The report points out that Bitcoin and the COIN50 index have recently fallen below the 200-day moving average, a technical indicator typically viewed as a signal of long-term trend reversal. Meanwhile, the total market capitalization of cryptocurrencies excluding Bitcoin has dropped 41% from its December 2024 high of $1.6 trillion to $95 billion, and venture capital funding has decreased by 50%-60% from its 2021-2022 peak. These data collectively suggest that the market may be entering a new "cryptocurrency winter".
The report first explores how to define bull and bear cycles in theurrcryptocurrency market><.
The traditional stock market often uses a% increase or decrease as dividing standard, define but this indicator seems inadequate in the more volatile crypto market. For example, Bitcoin once fell% a but was still in a long-term upward trend. In comparison, the 200-day moving average (200DMA) has proven to be a more effective judgment tool - when the price continues to run below this average and shows a downwardwardward, be considered a bear market a market.
<.Multiple structural pressures exist behind the market weakness. The implementation and potential escalation of global tariff policies have exacerbated negative sentiment, with traditional risk assets continuing to be under pressure in a fiscally tight environment. This macroeconomic uncertainty directly transmits to the crypto market. Although venture capital rebounded quarter-on-quarter in the first quarter of2, remainsved half of its peak, leading to a lack of new funds entering the Altcoin domain. It is worth noting that Bitcoin fell less than 20% in this adjustment, but other tokens overall dropped 41%, which confirms the higher risk premium characteristics of Altcoins.
The report verifies the severity of the current trend through risk-adjusted performance indicators (z-value). From November 2021 to November 2022, Bitcoin's price fell 76%, equivalent to a 1.4 standard deviation fluctuation, which is comparable to the S&P 500's 22% decline (1.3 standard deviations). Although this quantitative method can effectively filter market noise, its signals often lag. For example, the model only confirmed the end of the bull market in late February and maintained a neutral, failing to promptly reflect March's sharp decline.
data reveals the essential characteristics of. bear markets. True market structural changes often accompany liquidity contraction and fundamentalation rather price percentage changes. The 200-day moving average model accurately captured trend reversals in018als stages such as the 018-2019 2019 winter, 2020 pandemic impact, and the 022 Federal Federal Reserve's rate rate hike cycle. cycle In the current environment, early environment, early warning signals such as as narrowed market depth and defensive and defensive sector sector rotation have, appeared, phenomena that have previously signaled significant declines in past cycles.The coinbase's research research team believes that while maintaining a defensiveive posture in the short term (next 4-6 weeks), they expect the market may explore its bottom in the middle and late second quarter of the of 025, creating conditions for recovery in the third q3rd quarter.
< p judgment is based on two key insights: first, the crypto market is extremely sensitive to sentiment changes often, showing rapid reversal characteristics once a turning point appears; second,,, marginal improvement in the current regulatory environment may become a unique catalyst for future rebounds. However, the report also emphasizes that against the backdrop of weak stock market performance, an independent upward trend for for cryptocfacesurrfaces challenges.The research team's market prediction record since 2022 shows that their judgof cyclical inflection points has high reference value, such as accurately foreseeing the rebound in the first quarter of 2023 and the upward trend in the quarter fourth quarter of 2024.
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This report ultimately conveys a cautbut notnpessimistic core view.. Although technical indicators and capital flows clearly show the the market has entered an adjustment phase, the stage, unique high volatility of crypto assets also means that recovery may be faster than in traditional markets. For investors, the current stage is more suitable for adopallocationting strategies, controlling controlling the overall risk exposure while preparing for potential market sentiment reversal.
However, all all analyses are based based data and the market is known forredany political changes or regulatory breakthroughs could quickly rewrite the current market narrative.
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